Partners, Volume 13, Number 3, 2003

Moving Beyond the Pulpit: Community Development Tools for Faith-Based Organizations

“The business of the church remains what it always was, ministering to the whole person and the whole community.”

—C. Eric Lincoln, excerpt from Economic Empowerment through the Church

Spanning the annals of history, faith-based institutions have served as a catalyst for change in the realm of social, political and economic issues affecting the lives of all Americans. This role became most apparent in the 1960s, when the church gave a voice to the impoverished and disenfranchised in the fight against civil rights injustices.

In fact, it was the church that offered money, a protective structure for organizing and leaders who used skills honed in the pulpit to provide direction to the U.S. Civil Rights movement.1 Responsiveness to the needs of its members and the community has placed faith-based organizations at the forefront of social service, providing food, clothing and shelter to the less fortunate.

Today’s societal and economic changes are demanding that faith-based organizations develop a more comprehensive approach to addressing the increasingly complex needs of the communities they serve. Faith-based organizations are well-positioned in many ways to expand their programs to address the need for affordable housing and economic empowerment.

According to a HUD report, The Role of Faith-Based Organizations in Community Development, the worship community’s participation in the provision of human services is greater among congregations that (1) are larger and have more resources, (2) are located in low-income neighborhoods, (3) are theologically progressive and (4) are African-American. It is also important to note that though these congregations may be located in low-income neighborhoods, they typically include a significant number of middle-class members. Strong leadership is critical, however, in undertaking a realistic assessment of critical areas before embarking on the challenging work of community and economic development.

Assessing community needs and assets

Regardless of the type of organization involved, effective planning is essential to sustainable community development. One of the first steps for a faith-based organization in its strategic planning should be a community assessment. This process should include not only an analysis of the community’s needs but also a realistic account of the community’s assets.

Often referred to as “asset mapping,” this strategy focuses on what is present in the community versus what is absent. It is an alternative approach to analyses that emphasize only deficiencies and problems and ultimately imply that a community’s residents are powerless to effect change. According to Kretzman and McKnight, “asset-based community development” starts by looking at three types of assets:

1. Assets and capacities located inside the neighborhood and largely under neighborhood control;

2. Assets located within the community but largely controlled by outsiders;

3. Resources originating outside the neighborhood and controlled by outsiders.2

The unique advantage that faith-based organizations can bring to this process is a closer connection to the community’s residents that makes it possible to garner both their support and input. This established level of trust includes a responsibility to make sure that the community is actively involved.

In his book, Reweaving the Fabric, the late Rev. Ron Nored emphasizes the importance of gaining a consensus regarding the vision of the church and neighborhood. “Revitalizing a community requires concentrated attention to building relationships and providing opportunities for people to share what is important to them.”3

The ideal result is tangible as well as intangible: a plan evolves that will be the basis for establishing priorities in developing projects; and a community has been empowered by its inclusion in the process.

Building organizational capacity through collaboration

Once the strategic plan and supporting priorities have been established, the faith-based organization must look internally to determine its resources and capacity. Many pastors may have vision but lack the requisite technical skills necessary to implement an effective community and economic development (CED) program. The key is making use of the expertise of members of the congregation who may be attorneys, accountants or bankers, as well as acquiring technical assistance through training programs, workshops and conferences. Another option is to hire competent staff and/or consultants.

Faith-based organizations, especially those that lack experience, should also consider seeking out other partners in accomplishing their community development goals. Increasingly important in the community development field, collaboration allows organizations to leverage both technical and financial resources. From the perspective of funding, agencies often prefer to support collaboratives rather than organizations working independently. The goal of a collaborative approach is to maximize the impact of limited resources through greater effectiveness.

Structuring the legal entity for CED activities

A wide spectrum of CED activities is open to faith-based organizations. They may opt to establish credit unions, build affordable housing, create retail developments or provide day care. Before broadening their ministries into community economic development, however, faith-based organizations must decide how to structure these activities.

Generally, faith-based organizations establish a separate corporation for CED activities. This structure has several advantages, but the principal one is to insulate the members of the congregation and the religious corporation. Separate incorporation is also appropriate for the long-term nature of CED projects. The nature of the CED activity will help to define the optimal structure.

Whether the faith-based CED corporation is designated as “for-profit” or “not-for-profit” will determine what types of funding sources can be approached for capital and grants. Consequently, no decision should be made without seeking the counsel of an attorney and/or tax professional familiar with federal and state laws.

Governance and taxation issues

While it may be hard to pinpoint the most important component of a successful faith-based community development project, there is no question about the areas that pose the greatest risk to the faith-based organization: these are governance and taxation.

After establishing a legal entity such as a community development corporation (CDC), the next issue to consider is the nature of its governance. For example, what will be the composition of the board of directors and how will the community be represented on the board? How often will elections occur? Who will participate in the elections?

All of these matters should be outlined in the bylaws of the corporation. The bylaws guide the governing structure by designating the number of board members, the frequency of elections, the length of each director’s term and the participation in the board elections. Finally, the bylaws typically specify the officers of the corporation and define their powers.4

The organization must then consider the tax implications of its CED activities. Most importantly, it must ensure that any profits generated from CED projects will not jeopardize the church’s tax-exempt status. Establishing a strong financial management and record-keeping program is crucial not only to address tax issues but also to avoid commingling community and church funds. This is particularly important when public or subsidy dollars are involved.

Is CED your congregation’s calling?

Theologian James Cone is quoted as saying, “Faith is the most powerful force in the world.” Within this context, the question for faith-based organizations is not whether we can engage in CED activities but whether we should.

A 1999 study of national congregations found that only 18 percent participate in CED activities. On the one hand, this may be viewed as a sign of the vast, untapped potential for faith-based organizations to become involved CED activities. An equally valid conclusion, however, is that achieving entry into the complex CED arena is difficult. Congregations may also have limited resources or choose to focus on other social services.

Many examples exist of faith-based organizations that have been successful in community development, and great potential remains for others to make the transition from supporting to building communities. The bottom line is that each organization, with the guidance of strong leadership, must determine whether community development represents the best use of its resources.

Endnotes

1. Juan Williams and Quinton Dixie, This Far by Faith: Stories from the African American Religious Experience (New York: William Morrow, 2003), 2.